Vedanta Demerger Approved: Stock Hits 52-Week High in 2025

Introduction

Vedanta Ltd. has captured investor attention as its stock surged to a new 52-week high, driven by a significant milestone in its corporate restructuring. The National Company Law Tribunal (NCLT) has approved the company's plan to demerge into five separate listed entities, a move aimed at unlocking shareholder value. This positive development has largely overshadowed recent news of the company receiving several minor penalty orders from GST authorities. With the demerger set for completion by 2026, the market is closely watching Vedanta's next steps.

Strong Market Performance

On December 26, Vedanta's shares reached a new 52-week high of Rs 607.65 on the BSE before closing the session at Rs 601.10, marking a 0.50% gain. The company's market capitalization stood at Rs 2,35,053.43 crore. The stock has demonstrated strong momentum throughout the year, delivering a year-to-date return of over 35%. This rally reflects growing investor confidence in the company's strategic direction, particularly its transformational demerger plan.

The Demerger Catalyst

The primary driver behind the stock's recent performance is the NCLT's approval for Vedanta's demerger. The plan will restructure the diversified natural resources conglomerate into five distinct, sector-focused companies. This move is designed to simplify the corporate structure, provide investors with direct exposure to specific commodity businesses, and potentially reduce the conglomerate discount that has historically affected the stock's valuation. The entire demerger process is targeted for completion by March 2026.

A Look at the Five New Entities

Post-demerger, shareholders of Vedanta Limited will receive shares in four new listed companies in proportion to their existing holdings, in addition to retaining their shares in the parent company. The five resulting entities will be:

• Vedanta Aluminium: A fully integrated producer focused on value-added and low-carbon aluminium products.
• Vedanta Oil & Gas: India's largest private oil and gas exploration and production company, aimed at enhancing domestic energy security.
• Vedanta Iron & Steel: A vertically integrated platform combining iron ore, steel, and value-added ferrous operations.
• Vedanta Power: An entity housing the company's independent power generation assets.
• Vedanta Limited: The existing company, which will continue to hold its stake in Hindustan Zinc Limited and incubate new businesses.

Recent GST Penalty Orders

While the demerger news has been positive, Vedanta also disclosed receiving three tax-related penalty orders within a few days. The total penalty amounts to approximately Rs 11.16 crore. The orders relate to issues such as the availment of ineligible Input Tax Credit and delayed tax payments for fiscal years ranging from 2018-19 to 2022-23. In its regulatory filings, Vedanta stated that it is evaluating its next course of action and does not expect the orders to have any material financial impact on the company.

Strategic Focus on Critical Minerals

Further strengthening its portfolio, Vedanta has been declared the successful bidder for two critical mineral blocks. The company secured the Depo Graphite - Vanadium Block and the Genjana Nickel, Chromium, and PGE Block in recent government auctions. These acquisitions align with India's focus on energy transition and technological advancement, positioning Vedanta to capitalize on the growing demand for critical minerals.

Analyst Outlook and Price Targets

Brokerage firms have responded positively to the demerger approval, with several upgrading their ratings and price targets for Vedanta. Analysts believe the restructuring will unlock significant value and allow for a more accurate valuation of its individual businesses. The consensus is that the separation will help reduce the conglomerate discount and highlight the strength of each vertical.

Analysts at ICICI Direct cited robust non-ferrous prices and strategic expansions as key positives, while Citi noted that the demerger would help reduce the conglomerate discount. The overall sentiment on the street remains bullish, contingent on the successful execution of the demerger and stable commodity prices.

Conclusion

Vedanta is at a pivotal point, with the NCLT-approved demerger set to reshape its future. The market has reacted with enthusiasm, pushing the stock to new highs. While minor GST penalties present a small distraction, the strategic rationale behind the five-way split remains the dominant narrative. Investors will now be focused on the execution of the demerger, particularly the allocation of debt and the operational independence of the new entities, as the March 2026 completion date approaches.